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The moral of the story: nonprofit boards may want to be more fully informed about whether the organization’s operations are being conducted consistent with the organization’s theory of change, mission and values.  Or, should they care?

The Slate Magazine story title “Silence of the Lambs” provides some interesting insights into what might actually be going on behind closed nonprofit doors operating in other countries.  Yes, there’s a slant that of course suggests, in the mind of an investigative reporter, that all is not what it seems.  But there’s also a bunch of facts and even some positives thrown in that are cumulatively offered to lead to one conclusion: think and learn before you give.

More importantly, I would also offer that the boards regulalry revisit their theories of change, their missions and most importantly, their values.  My question: should a nonprofit board know deeper and broader about their organization’s work than just about impact or outcome?  Or is impact or outcome enough?

Let’s see: there’s risk issues, reputation issues, customer relations issues…..?

The Patient Protection and Affordable Care Act, the new federalhealth insurance law enacted on March 23, 2010, provides fortax credits for eligible small employers, including non-profits,for health insurance premiums paid for employees. The Centerfor Non-Profits, along with the National Council of Nonprofits,Independent Sector and other advocates, fought hard forinclusion of non-profits in the tax health care credit for small employers.

In order to be eligible for a tax credit:

• The employer must pay at least half of the insurancepremiums for at least some employees at the single(employee-only) coverage rate.
• The number of FTE’s (full-time equivalent employees)must be fewer than 25; and
• The average annual wages per employee must be lessthan $50,000.

Eligible tax-exempt organizations can take a credit of upto 25% against the employer portions of Medicare andemployee’s income taxes withheld from the employee.Employers with fewer than 10 employees and less than $25,000 annual wages per employee will qualify for thehighest credits. Other requirements apply.

The tax credit will be available beginning with the 2010 taxyear. The IRS has begun publishing general informationabout the tax credit, and additional guidance for tax-exemptemployers will be forthcoming. To find out if your organizationmight qualify, see the following IRS Web pages:
IRS Small Employer Health Care Tax Credit Announcement Page: www.irs.gov/newsroom/article/0,,id=220809,00.html
IRS FAQ’s about the tax credit: www.irs.gov/newsroom/article/0,,id=220839,00.html
IRS “3 Simple Steps” Worksheet for small employers: www.irs.gov/pub/irs-utl/3_simple_steps.pdf

That said, if your organization has made a concerted and reasonable effort over time, there are some tremendous gifts that this body of data can give you. If your database hasn’t been neglected or is in some sort of of order, the data IS trying to tell you some valuable tips for raising money and growing relationships. Are you listening?

1 — How recent? Learn how to run the basic reports of gifts over time, within a certain period, and so on. A long-range strategy will help you define whether you would rather have one donor giving $600 a year ago or one donor giving $50 a month for 12 months, and how to appreciate how each should be treated going forward.

2 — Lapsed donors. At the other end of the spectrum is the lapsed donor, where your reports should help you review the last 12, 18, 24, even 36 months. Some experts recommend not removing a name until it becomes a 60-month lapsed donor. A good rule of thumb is to continue to send email/mailings to your lapsed donor group for as long as the results are as good or better than appeals to people who have never supported the organization.

3 — How often? Again, your own plan will define what you consider to be a frequent donor.  “Low” is usually one gift a year, “medium” could be two gifts or more within 12 months, and “high” mighty be three or more gifts in a year. “High” donors should probably be moved into a personal solicitation program.

4 — How much? Don’t get stuck in measuring your success solely based on the revenue in from a particular email/mailing or even a single campaign. Cash is obviously important, but so is building your base of interested contacts. Beyond dollars, you are seeking willing donors, so a well-researched record can also include your analysis of this person’s ability/capacity to give.

5 — From where? Where did this person come from, or how did they discover your organization? Tracking this is arguably the single most important fact in a record beyond the name and contact information. Your use of coding is absolutely essential: is this the record of an individual, business or corporation, foundation, government agency, church or synagogue, association or union, or service club?  You must be able to see the obvious trends that your best recent results have come from: constituents, current board, former board, volunteers, staff, current donors, lapsed donors, vendors, affluent person with a connection to your organization, or supporters of your issue/industry.

6 — Preferences? Method of contact and frequency will both be variable based on what cultivation status you consider this donor to be. If you’re preparing to ask this individual for a major gift, cut back on routine email appeals.

7 — Notes section? What is their connection to your issue? Have they attended specific coded events? Volunteer involvement, interests/hobbies, birthday, family?

8 – Have you met? Each file should indicate something like (1) best of friends; relative, or close business associate; (2) acquainted and friendly; (3) met once or twice; (4) have never met; (5) hostile relationship.

9 — Prompt thank-you or other acknowledgement? This should be within 48 hours. We are always disheartened to learn about client organizations who neglect this essential step.

10 — Flagged for next move? What is your defined measurement for a donor who is ripe for an upgrade? Think big. The capacity for most adults in the U.S. to give is wildly underrated, even in these challenging economic times. “Americans tend to donate about one-fifth of what they can afford to donate. In other words, most people can afford to give five times as much as they are currently giving without substantially changing their lifestyle,” writes Stanley Weinstein in The Complete Guide to Fundraising Management.

If any part of this list leaves you envious about the potential of what a well-managed database could do, think about starting today with a step-by-step plan to get there. Start with a small number of files to be updated and completed. It can be a daunting process, to be sure, to truly build a management tool rather than just keeping a list.

So I sat with the team on call with a new client…what a great opportunity when we discovered they have over 5,000 names in their database!

Too many nonprofit staff and management simply view their fundraising database as a glorified mailing list. They aren’t thinking about the strategic uses of the information. Created and managed properly, your database can be a powerful tool in at least four ways.   Even if you don’t have a tested donor management software, most databases have decent filters built-in to get the info needed.

(a)  Scorekeeping – the basics of how much has been donated, how many active donors you have, what your response rates are on repeat donors, and so on;

(b)  Attention-directing – making it easy for you to see trends in donor origin or behavior, or to see that it is time to cultivate certain donors such as the prime prospect who is ready to be elevated to a more personal interaction;

(c)  Problem-solving – including helping you figure out what tactics are and are not working, or helping you to analyze costs of a certain campaign per dollar raised or the cost of a new prospect identified; and

(d)  Integration across your entire resource development strategy, including timelines; your software may be able to manage your grant submittal calendar, too, or volunteer teams on assignments and follow-up; you should even create your own data maintenance schedule and create flags for yourself and your colleagues.

So perhaps your nonprofit is back in the “we consider it our mailing list” mode. At least make sure it is the best list it can be. Did you know that the quality of your data list is generally considered to be responsible for at least 50 percent of the success of an email/mailing program (with the message of the campaign and the creativity of its presentation considered to be responsible for 30 and 20 percent, respectively)?

To make the transition from mailing list to strategic tool, you MUST have someone who is both passionate about, and accountable for, the ongoing data maintenance–getting new data entered following a major event, making sure call and meeting notes are complete, and staying on top of duplicates, bounced messages, returned mail, and so on. There are some obvious reasons why this work is better suited to an employee than a volunteer.

As a strategic management tool, your database is only as strong as the thought that has gone into creating the software (which you likely cannot control) and entering and managing the data (which is completely your responsibility, critically important, and so often neglected).

Working for a non-profit is a rewarding, but also a very challenging experience. Whether, your dealing with critical local, national issues, global poverty, HIV pandemic, no water, lack of resources, staff care issues, death threats and violence, your work can be very difficult to bear at times. And, to add to this dynamic, it’s inevitable that your nonprofit work will spill over into your personal life. Balancing your life with these pressures is tough!

We’re now at the two-year mark of the infamous economic meltdown of 2008, and the news about a recovery is still very mixed. Your nonprofit may not be at risk of failing outright this fall, but most of our clients are a long way from robust and healthy.

We all can appreciate how employment levels dictate consumer confidence, and consumer confidence is linked to donor confidence. Many nonprofits are bracing for a third consecutive holiday or fourth-quarter appeal that falls short.

I recently heard from a friend “when the going gets really tough, the tough really get going.” It’s critical to find ways to stay positive and motivated. Here are the first three of ten valuable lessons I’ve learned throughout my 30 years in the field that have helped me overcome obstacles both in my personal life, and as a nonprofit leader.

1. Look after yourself! If you don’t, you’ll have a hard time taking care of others. Self care is not a nice idea–it is an essential idea. Stop thinking of it as some kind of spoiled selfishness. Your family and world needs you. There’s a good reason why they tell you to put your oxygen mask on first, and then put one on your child.

2. When you feel overwhelmed “pull over,” pause and breathe. Take one step at a time. Learn to sort out and prioritize well. Put a small piece of the puzzle into place and then work on the next piece. Don’t try to tackle it all at once.

3. I have learned compassion and passion without competence creates a dysfunctional action. Empathy and compassion are wonderful traits, but to succeed in life and in the nonprofit field, you must be intentional about developing and refining concrete skills and competencies. The job of leading a nonprofit organization is almost, by definition, impossible: daily you must move consciously move between internal and external demands, and between management and leadership decisions, just as you rely one moment on intuitive and soft skills, and the next moment on your ability to find resources, analyze data or direct resources.

Check back next week for my next 3 valuable lessons, and if RG can help serve your non-profit needs write me a note dan@rgdevelopment.us

Some nonprofits have a large enough staff to have a financial officer who is tracking and analyzing trends in revenue and expense year-round and developing 18- or 24-month projections from a variety of perspectives; some nonprofits have one person who spends a weekend drafting a budget and submitting it a few days later to the board for approval. No doubt your organization is somewhere in between these two extremes. One thing that many of us have in common is that now is the right time to begin the budgeting process for 2011.

We received some helpful insights from Julio Marcial, program officer for the CA-based California Wellness Foundation, on the subject of budgeting at recent meeting with non-profit execs. Our roundtable discussion included the following:

1. Allow sufficient time for your data gathering, discussion, presentation to the board, questions, and final vote. Whether you have a finance committee or not, 3-4 months is about the average time you should spend on this process. If your program/fiscal year follows the calendar year, appreciate that this is an imperfect process: it is a fact of life that you will begin your work before you have your third quarter results in hand, and your board will be asked to approve your budget for 2011 before you’ve actually closed the books on 2010. Use precise data when you can, make reasonable projections when data is not at hand, and most of all, use common sense.
2. Define what a budget truly means for your organization. It is not merely “something that the accountant” (or finance committee chair, or executive director) manages in order to meet legal requirements.  A budget is a demonstration of your mission priorities–a method of communicating what your nonprofit exists to achieve.
3. Consider this a learning exercise, not a bookkeeping task. The budgeting process should ideally involve different individuals around the table, helping to bridge the all-too-common gaps between board members, between board/staff, and between various program areas. Do not risk doing this critical work in “silos” or a vacuum. At best, your time spent as a team working on a budget will uncover any potential weaknesses in your assumptions about what is working well.
4. Avoid the temptation to simply take last year’s budget and add a few percentage points across the board. If you do this, you are postponing tough but important conversations about measuring success, ignoring potentially important trends that may be shaping your industry, and missing a chance to educate and engage stakeholders about your mission and operations. If you have time, do a zero-based budget exercise with your board: what could you accomplish if the usual constraints were removed? A “blue sky” exercise can help launch conversations that are helpful when you get to crunching the numbers later.
5. Take care to revisit your strategic plan, if you have one, and translate multi-year goals into your annual work plan. Strategic goals should be linked to operations goals for the year, for the quarter, and certainly down to the job description level.  Having a strategic approach makes the annual budget much easier to write–and a much stronger roadmap as a result.
6. Always write a budget narrative. This makes your document accessible to more people and engenders trust and transparency about why certain programs are expressed the way they are. A narrative can give context, too, on the ways that your organization’s budget is unique.
7. Perhaps most importantly, your annual budgeting process is a powerful tool to evaluate success. Is a pet project actually less successful than its reputation implies, when all the hidden expenses are revealed? Is there an overlooked gem in your program roster that ought to be maximized and expanded, even in these lean times? Are you focusing too much on one measurable (i.e., cost per person served) and not on gauging impact? The time you dedicate to the budget process, the trust you extend to those involved, and the willingness to uncover delicate details can all pay off handsomely in the months ahead.
8. Consider “dashboard” reporting to your board at each meeting in addition to the usual year-to-date numbers. Cindy suggests a green-yellow-red coding for highlighted issues: green means that all is well and the topic does not need further consideration right now, yellow is something that staff is watching carefully, and red is a critical topic that warrants board attention now. Establishing a calendar for your board with defined check-in points helps assure them that key assumptions they made in the budget are being watched carefully (i.e., landing individual major gifts, etc. and other large sources of both controlled and uncontrolled income).
9. Remember that your board-approved budget for the year ahead is a legal instrument and cannot be significantly altered without subsequent board approval.  Your bylaws likely define what actions require board approval; always err on the side of inclusion and disclosure.
10. Your work isn’t done when the board approves your 2011 budget. An important step in the process is closing out the 2010 books, with a board report early next year on variances and a chance to celebrate successes. A narrative and/or graphing trends can be helpful in this presentation as well.

After exploring the roots of one’s own values from childhood with the Path of Life group, we defined the four circles that every leader exists within and must be mindful of: personal values, organization values, community values, and sector-wide values.    Here are 10 proven tips for ‘walking the talk’–that is, ensuring that as leaders we must always lead others from a core of deeply held values, modeling the highest ethical behavior and representing our sector proudly:

1. Appreciate the origins of your personal values. From early childhood, we are influenced by not only family but also teachers/mentors, beliefs, literature, popular culture, and so on as we mature into adults and find what I like to call our “True North.” As a lifelong learner, you are well served to appreciate the adults, teachers, pastors, authors, etc. who have made you the leader you are today.
2. Seek alignment between your words and your actions.
3. Be authentic in your demonstrated, consistent values over time.
4. Model accountability to yourself first.
5. Make only those promises you intend to keep.
6. Tell the truth as fast as you can.
7. Choose words that inspire emotion and that people can relate to.
8. Remember that the little things are the big things.
9. Be obsessed with fairness. Take a thoughtful and balanced approach to everything!
10. Research, relate to, and most importantly, respect whatever community you are in.

Ethical challenges are sometimes referred to as the difficult choice “between right . . . and right.” Well above the non-negotiable boundaries of the law, conscience, and/or one’s own faith, there are often grey areas in our lives where a choice must be made between valid, but competing, courses of action. This is the kind of high level decision-making that nonprofit boards hire executive directors to tackle.

One challenge we’ve touched on before in discussions of corporate sponsorships is the decision to take money from a company whose industry, product, advertising, hiring practices, or philosophy are arguably contrary with your mission. Does the benefit to fund your program–which could be substantial–outweigh the community’s potentially misguided perception of your mission? Can you find a win-win that doesn’t compromise your nonprofit’s values but also helps the corporation improve its image? This social stalemate has created much tension with well-to-do community members, staff and volunteers.

As seasoned nonprofit leaders know, many more ethical challenges exist in our everyday lives. Here are a few examples (all borrowed from recent real life):

Privacy. Your data base contains deep detail about a number of wealthy individuals in your area. Some, although not all, are your donors and the rest are dormant. Your development budget and staffing is really tight. Another nonprofit whose mission is compatible, but not competing, with yours has offered you a very nice fee in order to access this data for their own planned giving and cultivation. You don’t know whether your predecessor as development director had a privacy policy which was shared with these individuals at the time the data was gathered. You appreciate that some donors are sensitive about how new organizations acquire their names. Should you take the fee and share the data?

Social/political agendas. You have received news of funding for your new teen health outreach/education program from a large, faith-based foundation in your area that has a conservative stance. You have just been informed that the program has also been awarded a start-up grant from a smaller foundation that is identified with progressive policy, particularly on behalf of the gay, lesbian, bisexual and transgendered community. The large funder advocates abstinence and the new, smaller funder sees your program as an opportunity to teach safe sexual behavior, including condom use, as well as acceptance for alternative lifestyles. Your program hasn’t even rolled out yet. Can you deliver program that satisfies both funders, or should you finalize the curriculum based on one perspective, and return the other foundation’s money?

Our goal isn’t to provide the answers but to help you recognize these challenges as they arise. Too often we fear talking about these kinds of questions because people quit your cause, tempers may flare, or feathers will be ruffled.

Once you can appreciate that your dilemmas are of an ethical nature (i.e., not an obvious “right” answer), one proven decision-making method to help guide your organization is to think about the ramifications of publicizing your decision. How will you feel if your choice becomes a headline in tomorrow’s paper, or on the evening news? How will the specific people whose opinion you most respect feel about you or your organization? This method has always helped create the right filters and questions for sound decision-making.

In closing, it is naïve to assume that ethical challenges have an obvious answer. As adults and nonprofit professionals, we are confident within the learned boundaries of ‘right and wrong’ (“Should you take something that does not belong to you?”) and can focus on the deeper questions that emerge in our lives, the people we work with, and the people we serve. Remember that part of leadership is facing fears and being willing to have difficult conversations. Ethical challenges confront us virtually every week. Your first task as leader is to see them and prepare to move through them with grace and wisdom. Together, your board and senior staff must build the trust and the fortitude to address ethical dilemmas honestly and directly, making choices that you all can live with.

Dan Rodriguez, Managing Principal

Challenging times and lean budgets mean that the time you spend in a meeting matters more than ever. Don’t take it for granted that your meetings are well run and engage everyone. Learning effective facilitation skills is an essential leadership tool.

How do I prepare?  The bullet points covered are:

The issue is…

It is significant because…

My ideal outcome is…

Relevant background information…

What have I done up to this point…

The help I want from the group is…

I encourage you to send this filled-out form to everyone ahead of time.  Every now knows exactly what you are covering and what the conversation is about and what you want from them.

Next week we will share about proven ground rules…

Excerpt from Fierce Conversations

A strong facilitator has the ability to develop an effective meeting process and to set ground rules for the group.  Let’s look at some of the ground rules you can use when working with groups.

1. Begin and end on time. It sends a signal that this is a critical session worthy of busy peoples’ time.
2. Have a written agenda regardless of how comfortable or casual the group is with the topic.
3. Ask up front for your participants’ full attention, including silencing all communications devices.
4. Keep the focus on the future. It is important to understand what has gotten the group to the point where they are, but it’s probably more important to spend time looking ahead. If necessary, tell your group outright that this is not a time for airing complaints, blaming, recapping, etc.
5. Ensure that all are heard. Encourage everyone in the group to contribute and make sure everyone has a chance to speak. It is your job as facilitator to prevent a single person from dominating the conversation.
6. Speak in the first person and speak for yourself. Don’t let the group speak about or for other people, but focus in on the person speaking in terms of “I think, I feel.”
7. Be concise and ask others to be as well. Ask everyone try to make three precise and to-the-point comments rather than rambling on with lots of stories and wandering off the central topic.
8. Model exemplary listening (and good manners). Make sure everyone really listens to the person who is speaking rather than always thinking about what they are going to say next. Deal quickly but politely with side conversations, off-the-subject tangents, or interruptions.
9. Respect and encourage a wide range of perspectives. Make sure that everyone respects each other’s opinions. Within the time constraints, encourage different points of view and perspectives.
10. Be the crew, not just the passengers of the ship. Make sure everyone takes responsibility for the discussions and the decisions. No one at the meeting should be “just an observer.”
11. Tune your radar to detect “groupthink” and unspoken (but real) objections to the plan.
12. Have courage and speak what is honest and truthful. Communication is built on not being afraid to say what you believe and feel, as long as the well-being of the group (and the goal) is preserved.
13. Make sure the next step–or meeting–is defined.
14. Give every opportunity for the agreements made to be reinforced. If a hallway conversation afterward immediately detracts from the agreement, you have somehow failed.

Excerpt from Fierce Conversations